December 5, 2009

Mr. Watanabe's situation illustrates the often-uneasy relationships casinos have with their biggest clients, also known as "whales." Casinos vie to lure these high rollers by doling out luxury suites, use of private jets, and a cadre of personal handlers to fulfill every flight of fancy, from wire transfers to fishing trips to Alaska....

In a series of emails signed by Mr. Ning, the Harrah's marketing executive, the casino company laid out the terms that it was willing to offer him, which included "a special formula just for Mr. Watanabe."

Mr. Ning specified such offers as tickets to the Rolling Stones, $12,500 a month for airfare and $500,000 in credit at the gift stores. Harrah's also offered 15% cash back on table losses greater than $500,000, special high-limit games and other incentives....

I'm all for being held responsible for personal behavior, but I feel that Harrahs (and it wasn't all Casinos...apparently Wynn's blacklisted the fellow because they thought he was compulsive)acted despicably by preying on this fellow's weaknesses.

$127 MILLION dollars! Shouldn't Harrahs have realized that there's something wrong here and that they were horribly exploiting the individual and the situation?

Helps a little, but with maybe 8 decks and reshuffling before finishing them, the odds are still in the casinos favor. But in Las Vegas, it can still get you banned from the casinos, if caught. Not so, apparently now, in Atlantic City.

I was surprised though that he was playing at the Rio. Caesars, definitely. I have been to Vegas twice in the last month (and going again tomorrow), and stayed at the Rio both times due to the cheap prices on their suites - maybe $50 a night for 600 square feet, excluding Fri. and Sat. They are supposed to be 4 star rooms, but everyone in Vegas is cutting corners now, and I would give them maybe 3 1/2 at best. Which is why I wonder why he was playing at the Rio.

I have been to Vegas twice in the last month (and going again tomorrow).

And, no, I don't gamble there, or even here, just south of Carson City. As I tell people, I have degrees in mathematics and business, and write patents on much of the legal gaming, whether they be slot machines, card games, etc.

So, I was happy the last time I played the slots, maybe a year ago, to come out of it $.50 down after maybe an hour. (Girlfriend is the one who does want to play, luckily very rarely, and so I give her $20, and when she goes through that, we are done).

After awhile, all those flashing lights, noises, etc. just kinda disappear, as you walk through the casinos (and pretty much everywhere else in Nevada, including airports, grocery stores, etc.)

$127 MILLION dollars! Shouldn't Harrahs have realized that there's something wrong here and that they were horribly exploiting the individual and the situation?

Business is bad right now in the gaming industry in Nevada, and esp. bad in Vegas. A year or so ago, Vegas was crowing because they were able to maintain their market, while Reno had crashed, due partially to the Indian gaming in CA. But now? Reno is about where they were, and Vegas is apparently doing worse now.

So, you have some very highly leveraged companies that are desperate for cash flow. I think I saw a mention that this one guy provided some 5% of Harrah's income last year. Something like that. That is really big right now.

Kudos for Wynn for walking away from it. Despite persistent rumors of mob connections, they continue to have a lot of class, a lot more so here apparently than Harrah's.

Wynn also seems (from the outside at least) to not be having as much trouble as many of the other casino/hotels in Vegas. I still haven't found cheap rooms there (though the woman who shared the exit row with me 2 weeks ago stays there a lot for around $100 a night), which is why I haven't stayed there yet.

Not in this case. He is an exceptionally capable businessman. I'd be concerned about the average Joe who interacts with the casino but not someone who has gobs and gobs of cash to blow and chooses to do it in a form of entertainment that every reasonably smart person understands is a losing proposition for the player.

I enjoyed the cadence of the article. The phrase "Ms. Jones says" occurs eight times.

Several former and current Harrah's employees say their managers told them to let Mr. Watanabe continue betting while he was visibly intoxicated, even though casino rules and state law stipulate that anyone who is clearly drunk shouldn't be allowed to gamble. These employees say they were afraid they would be fired if they did anything to discourage Mr. Watanabe from gambling at the casinos. Ms. Jones says company policy is to ask intoxicated gamblers to refrain from gambling. She says Harrah's has conducted an internal investigation into how its staff treated Mr. Watanabe but declined to release details because of the ongoing litigation.

Those employees are toast. If you choose not to do the right thing - understandably, in this instance - avoid the temptation to redeem yourself.

The gambling losses are not tax deductible except to the extent of gambling winnings. Do you suppose the IRS has the balls to tax the guy on the Stones tickets, airfare and other goodies. Seems to me they meet the definition of income under the IRC.

1. They continued to let him bet despite being too drunk to do so in a legally enforceable manner. A contract signed while the guy's drunk may be enforceable, but it's still really scummy behavior. Or,

2. He decided to cut himself off, and the casino refused to bar him at his own request. It doesn't sound like that was the cast, but I'm pretty sure casinos are supposed to have that kind of policy for recovering gambling addicts.

Assuming that's not the case, I have no problem with the casino taking his money.

People are asking to be taken. The idea of the Casino being your friend who treats you well and wants to do good things for the gambler is magical thinking akin to supporting Democrat politicians in DC. It is a strange accidental event if you are not skinned alive.

The point at which I'd blame the casino is the one where Mr. Kunder gave Mr. Watanabe prescription pain medication from his personal supply even "a single time."

At that point, the casino's employees moved from an ethically questionable area involving judgment calls to an explicitly illegal act to facilitate the guy's gambling.

Not that Mr. Watanabe deserves any compensation from the casino for his own idiocy. But voiding his debt to the casino and letting the casino pay the fee to the bad check unit seems an appropriate hit against them.

Learn card-counting, is my advice.

Helps a little, but with maybe 8 decks and reshuffling before finishing them, the odds are still in the casinos favor.

Unless the dealer is counting along and specifically shuffling when the shoe gets hot, you can still extract a hair-thin player edge with perfect play (both on cards and bets). You're not going to get rich on the available margin and you are going to be identified, so you'd best play where counting is protected by law and play because you like the test of your skill for real stakes. (You'll probably make mistakes and lose to the house anyway.)

But this guy? He played slots and roulette. He hit the blackjack tables, but if he could even explain perfect basic play when sober, I'd be surprised. He chose to throw away his money, and he got exactly what he chose.

As has been pointed out with 8 decks which are shuffled as often as every deal (a friend encountered this), counting itself is highly unlikely. You can, however, still understand odds and place bets accordingly which, as has also been pointed out, gives you a very slight edge over the house. That said, I've never mastered it--I suck at gambling and avoid it (though my best friend has paid for dinner with his winnings.)

Credibility matters, in terms of a business. Smarts matters. Enlightened, or otherwise, self-interest matters. Above all, sustainability (and in this sense, I'm NOT talking eco-green ... but rather the other kind) matters.

You know, it's possible to be a proponent of capitalism, and a supporter of capitalism, and even a promoter of capitalism, and to **also** think that there are greedy-pig businesses AND greedy-pig people in the world ...

and to hold both in utter contempt, for the stupid, greedy-pig, short-sighted shits that they are.

Wow. I have a posted comment (one that was posted after the just previous one that does appear on this thread, and before this one I'm writing, which, as usual, I assume will appear) in my gmail inbox which does not appear here. I'm assuming that's a hiccup. We'll see.

You're not going to get rich on the available margin and you are going to be identified, so you'd best play where counting is protected by law and play because you like the test of your skill for real stakes. (You'll probably make mistakes and lose to the house anyway.)

That is part of the reason that a lot of casinos do not actively enforce the no-counting rules - most players are not capable of playing the perfect game.

As noted above, the jurisdictions that protect card counting don't include Las Vegas. And, I don't expect to see it in the near future in Nevada. Gaming is just too big a business here, and there is still a bit of the old west here.

As I mentioned earlier, there were recently court decisions in two states recently (one being N.J.) that said that casinos couldn't keep players out for counting cards in Blackjack.

This old west/libertarianism is also why Watanabe is more likely to go to jail for not paying up, than he is to win his suit against Rio/Caesar's/Harrah's for allowing him to gamble drunk, etc.

I'm willing to assign some blame to the casinos. They were obviously preying on the weaknesses (gambling, alcoholism, loneliness) of a man in a desperate state. As the article points out, Mr. Watanabe was groomed for the family business in his teens, became head of the company at the age of twenty, worked crazy hours, never had a romantic relationship (or, likely, any kind of relationship, including family). There is a strong suggestion in the article that he is an unhappy closeted gay man (most of his philanthropy was to AIDS organizations).

It's not the business of casinos to psychoanalyze their best customers (although they manage to do that very well, when there is money to be made from it), but I would think that ordinary people such as ourselves might have a modicum of sympathy for someone in who finds himself such a situation. Sure, a really strong, aware, wonderful person (such as ourselves?) would have avoided these problems - but couldn't we have a hint of empathy with someone weaker?

I agree with other posters who said that the casinos acted despicably - legally, perhaps, but still despicably.

After reading the article, I have to say that I agree with everyone that the casino played a cynical role in the matter. My opinion of Steve Wynn just shot through the roof, after reading that he had met personally with Watanabe, and barred him from the resort.

I understand his two personal "handlers" assigned by Harrah's were scared for their positions, but ultimately both moved on (one is in Chicago, the other at another hotel). But there was an anonymous tipline they could've used, maybe placing a call from a public callbox far away from their place of work should they feel paranoid. Come on, something could've been done.

Having said that, sorry, but it's Watanabe's fault. Just because you have enablers around you doesn't mean you are less guilty of what you do. It's a wonder Terrance didn't end up like Michael Jackson.

You have to be stupid to approve of casino gambling but disapprove of this situation.

The guy played for a whole YEAR. That by itself essentially guaranteed he would lose, and the stakes he was playing -- stakes HE CHOSE -- meant he'd lose big.

Casinos are businesses. This one's equity is publicly traded, meaning its management has a fiduciary duty to try to maximize shareholder value by maximizing casino winnings. I'm sure there were plenty of other casinos who'd have jumped at the chance to host this "whale" even if this particular casino didn't. Indeed, some of the perqs they gave this dude -- partial refunds on his losings!?! -- are stunningly favorable. (I've never, ever had a casino offer to refund my losings, and don't expect that I ever will -- no more than I've offered to give them back my winnings!)

The only allegation of any even arguably illegal conduct has to do with furnishing prescription pain meds, which seems awfully thin (and at any rate is confined to very rare occasions, not something that causally could have been a significant factor in his losses).

I'm a fan of personal responsibility. I'm a foe of people trying to abuse the judicial system to excuse their own lack of personally responsible conduct, which is exactly what this is. Were I the judge hearing this case, I'd likely sanction the plaintiff and his lawyers for filing a frivolous case.

As bad as the odds are in roulette, they are far better than those of Social Security. The expected return on a spin of the roulette wheel is around 95%. If a person were to put his monthly FICA contributions amounting to 15.4% of his income into a single spin of a roulette wheel, investing the proceeds in the S&P for 45 years, at 65 he would have some $2,000,000 in the bank.

If he died before reaching 65, his heirs would get the proceeds, as they would get whatever of the $2,000,000 were left upon his death.

When a person with Social Security dies, his heirs, apart from a pittance for minor children, get nothing.

Furthermore, like fishing, time spent at the roulette table is not deducted from your lifespan.

The Eagles were once owned by a nice man named Leonard Tose. He was a playboy who loved to drink and gamble. Tose had inherited a trucking company from his father- that was the source of his riches.

They say he lost $40-$50 Million in the Atlantic City casinos and so he had to sell his beloved football team.

He tried to sue the casinos too but lost and he lived the last years of his life broke and dependent on the regular charity from his ex-coaches and ex-players like Dick Vermeil and Ron Jaworski. True story!

What makes Harrah's different than any other business? Because at the end of the year he has nothing to show for it?

How much money did Michael Jackson burn in his obsessive shopping trips? Was it the responsibility of the stores to turn him away, even as in his case he was simultaneously encountering bankruptcy?

Personal responsibility is important. Whatever drive pushed him to this edge was his drive, and was his environment which made it expressed in this way.

Too bad he didn't have more of a political interest. This kind of obsessive profligacy could have easily earned him a spot in the Cabinet or a leadership role in Congress. All with much the same result.

Well, not exactly, at least it was his money he was burning at the casino.

Wantanabe is a fool, but the reality is the casinos prey on such fools (and that the Wynn barred him may go to Steve Wynn's father being such a fool and not wanting to prey off such an easy mark). Ceasars and Rio, more willing to take advantage of a weak man.

What is gone is gone, and I do not have a lot of sympathy for Watanabe, but I am sure they did try to keep him drunk all the time and the debts should probably be written off.

You know, it's possible to be a proponent of capitalism, and a supporter of capitalism, and even a promoter of capitalism, and to **also** think that there are greedy-pig businesses AND greedy-pig people in the world ...

I agree.

I'm pro free market. You could even say I'm an "arch conservative" on that point.

But I don't do business with gambling.

The State even likes to get in on the gambling action with lotto tickets. Sure, you get to watch destitute guys with holes in their clothes come in and buy $30 in lotto tickets on one transaction. But hey, maybe your kid will get a $500 scholarship from the State, so it's okay that the State, the lottery commission, and the local media collude to pump up fantasies of winning big to prey on the poor and bad at math.

I mean, yeah, so you just watched that dad in the beat up car drop $40 on lotto, and now his kid probably won't be getting a new pair of shoes, but it's cool--that State scholarship might cover textbooks for a year.

And yeah, normally gambling is restricted to certain areas, but it's the State, and wholly benevolent, so it's cool that it's in every convenience store.

That money simply went from one man who obviously did not have a good use for it to hundreds of casino employees who had at least as good or better use for it. Consider it a voluntary stimulus plan. The only kind there should be.

People call him a fool and then support it when the government does the same thing but by force. Somebody needs shut off alright.

Anyway, just a correction to one other comment--Harrah's is no longer publicly traded. It went private a year or two ago. I know--I cast my vote *against* going private (I owned a whopping couple hundred dollars of shares), lost, and was paid of rather handsomely for my modest investment. Same thing happened with Station Casinos.

He was not drunk for an entire year. In those lucid moments he had, he was fully capable of leaving Las Vegas and cutting his losses short. But instead he went back to the tables or slots and allowed himself to be plied with alcohol. Tough luck, dumbfuck.

One other thing: thousands of middle class people go to Vegas every year and blow sums that are proportionally as large as what Watanabe lost. Many of these people have 'gambling problems' and drink while they gamble. The casinos should forgive their debts too, I suppose. At the very least, he is no more deserving of your misplaced sympathy than any of them are.

Apart from all our dismissive comments about Watanabe being a fool, including mine, I have to say that his claim about Harrah's having behaved criminally to him rests on one important point -- did they ply him with booze and prescription drugs, rendering his decision-making abilities null?

THAT is the crime, not that he's a compulsive gambler and they preyed on him.

"One other thing: thousands of middle class people go to Vegas every year and blow sums that are proportionally as large as what Watanabe lost. Many of these people have 'gambling problems' and drink while they gamble. The casinos should forgive their debts too, I suppose. At the very least, he is no more deserving of your misplaced sympathy than any of them are."

Misplaced sympathy? You know, it's not impossible to believe that both Watanabe and the casino are at fault. And it's not impossible to have sympathy for addicts and other miserable people without also holding them accountable.

I never said that I thought that Watanabe should not pay his debts. I think he should (and has, at least in part, paid a staggering amount of money for his foolishness). In fact, the best possible result of all this might be that Watanabe learns a very expensive lesson that causes him to seek the help he obviously needs.

But remember the original question: Is there some point at which you would blame the casino?

Yes. Steve Wynn seems to have detected the general location of that point, and I'm amazed that other people can't also detect it.

Yes, I do have sympathy for addicts and other incredibly unhappy people, whether they are millionaires or ordinary middle class schlubs. You could probably summon up a little bit of sympathy yourself - just imagine that a son or daughter is weak and easy prey to some sort of predatory industry with an almost unlimited ability to exploit that weakness.

No. If the silly ass wants to lose his own money, that's his choice. If he claims he's incapable of stopping (either gambling or getting drunk), he should have himself declared incompetent and a guardian appointed.

"Misplaced sympathy? You know, it's not impossible to believe that both Watanabe and the casino are at fault. And it's not impossible to have sympathy for addicts and other miserable people without also holding them accountable."

The term "at fault" is interesting here. I would normally use that only when some wrong has been committed or some lamentable accident has taken place. I don't think this fits either of those descriptions. Both parties did what they always do, and the result was predictable. It was a larger sum than usual, sure, but if Mr. Watanabe has to make do with even $1 million for the rest of his life, I can't muster anything beyond a slight grimace for his sake.